History of Economic Analysis part 49 pdf

we must touch on another point, not because it is worth our while in itself, but because it has attracted attention beyond its deserts: Thünen’s famous formula for the ‘natural wage.’ He must have thought a lot of it, because he had it engraved upon his tombstone. For simplicity, consider a one-year productive process, the only expense of production being wages. Call the dollar value of the national net product p, the total pay roll w, so that total profits (which Thünen, like others, identified with interest) are p−w, and the rate of profits (interest) is Suppose that the wage receivers spend a fixed amount, a, per year, investing the rest, w−a, at the current rate of interest, On this investment, they will evidently earn If this expression is to be a maximum, we must have 4 (p and a being treated as constants), from which follows Thünen’s formula, w 2 =ap, or This wage would maximize workers’ income from investment. The idea is not without interesting suggestions and might be used among other things in certain schemes of profit sharing. But, of course, this wage is not ‘natural’ in the sense that the free-market mechanism tends to produce it. The formula does not embody Thünen’s theory of wages. Nor is it an essential part of it. The wildly unrealistic assumptions should not, however, prompt us to declare the argument wrong. Under its assumptions it is quite right. John Rae (1796–1872; not to be confused with the other John Rae mentioned in this book, the biographer of A.Smith), a Scotsman whose intellectual refinement—he had emerged from the Universities of Aberdeen and Edinburgh as a good classical scholar and mathematician 4 In order to have a maximum and not a minimum, it is further necessary that the second derivative be negative. But this is all right, since it equals a, p, and w being essentially positive. History of economic analysis 442 and as a biologist and physician who was at least half trained—and nervous sensibility made him a failure at everything he touched. From 1821 on, he roamed about in Canada, the United States, and other countries, the Hawaiian Islands included, where he had to rough it (two spells of schoolmastership being by far the most congenial of all the employments he tried) until, shortly before his death, he drifted with broken masts into the haven of a friendly house in Clifton, Staten Island. Yet, all the time, he also struggled with what under the circumstances was the greatest misfortune of all, an unmanageable wealth of ideas on the subjects of biology, philology, ethnology, aeronautics, and what-not—all, or most of them, parts of a grandiose plan, conceived in his youth, of a ‘philosophical history’ of humanity. Up to this point the reader will feel that he is recognizing a well-known type. He is wrong. For one achievement, complete and workmanlike, yet of striking power, refutes the idea the reader may have conceived. This achievement happened to be in our field. In vision and originality, Rae far surpassed the economists who were successful. The Statement of Some New Principles on the Subject of Political Economy Exposing the Fallacies of the System of Free Trade and of Some other Doctrines Maintained in the ‘Wealth of Nations’ was published in Boston in 1834. In this note we shall try only to appreciate the nature and importance of the performance and record its fate. Rae had not more than a saving knowledge of economics. It is evident that he owed such training as he had mainly to the work he attacked. But this he had mastered in all its ramifications, premisses, and implications as only a kindred spirit can, and after having developed his own ideas in constant reference to it, he proceeded to erect a structure similarly conceived. For it is this that we must see in his work: another Wealth of Nations or, more correctly, something that with ten additional years of quiet work, graced by an adequate income, could have grown into another—and more profound— Wealth of Nations. It follows that it would be quite inappropriate to dwell on the many minor good things the work contains—a few will be mentioned in the proper places. The essential thing is the conception of the economic process, which soars above the pedestrian view that it is the accumulation of capital per se that propels the capitalist engine. The conceptual apparatus developed in the First Book is glorified by the new vision but not otherwise remarkable and need not detain us any more than needs the Third Book, which deals with ‘the operations’ of that imaginary entity, the ‘legislator.’ Naturally, Rae’s dissent from Smith’s anti-étatiste views will primarily interest the student of economic thought. The Second Book, however, has attracted most of the attention that later economists devoted to the work. It may be called a theory of capital, conceived in unprecedented depth and breadth. To say that it presents the whole of Böhm-Bawerk’s theory is to display inability to understand Böhm- Bawerk. But two cornerstones of the latter’s structure—one of them also a cornerstone of Senior’s—are in fact there: the proposition that Review of the troops 443 ‘lengthening’ the process of production (postponement) will usually increase the physical amount of final product (ch. V), and the proposition that ‘the actual presence of the immediate object of desire’ will give to it, in our valuation, a decisive advantage over an exactly similar object that is expected to become available at some future date, even if this expectation be perfectly certain. As a rule, a work presenting novel ideas will not elicit response if it lacks the support which comes from being written by a well known author. We ought, therefore, to be surprised at the response it met with rather than at the fact that it did not meet with more. J.S.Mill noticed it, and—perhaps in consequence of this—there was an Italian translation in 1856. How, then, can it have been necessary to ‘discover’ Rae, as Professor Mixter rightly claimed it was? (Cf. C.W.Mixter, ‘A Forerunner of Böhm-Bawerk,’ Quarterly Journal of Economics, January 1897 and ‘Böhm-Bawerk on Rae,’ ibid. May 1902, and the same author’s (rearranged) edition of Rae’s work under the title Sociological Theory of Capital, 1905, prefaced by the biography from which the data above about Rae’s life have been taken.) The answer might serve as a motto for a chapter of the sociology of science. J.S.Mill was invariably fair and even generous. Sensing the quality of the work, he was glad to mention it in a friendly spirit, not only to accept from it a phrase that happened to fit into his line of thought (‘effective desire of accumulation’) but also to quote it copiously (Book I, ch. 11). He even went so far as to compare Rae’s performance on accumulation with Malthus’ performance on population. And all this, written in what was to be for forty years the most influential textbook of economics, was insufficient to introduce Rae to the profession or to rouse any curiosity concerning the rest of his book! Or, alternatively, if this impression is wrong and any considerable number of Mill’s readers did take it up, there was not one among them to realize its true importance. However, it may be of some significance to note that Senior knew the book (see ‘John Rae and John Stuart Mill: a correspondence,’ Economica, August 1943, p. 255). 2. THE RICARDIANS Of all the groups that formed and dissolved during the period under survey, the Ricardian circle alone deserves separate treatment. The brilliance of its central figure, the international prestige it enjoyed for a time, its prominence in public debate, its achievements and failures—all this and more can be adduced in justification of the attempt to make readers visualize it as clearly as possible. Moreover, the group was a genuine school in our sense: there was one master, one doctrine, personal coherence; there was a core; there were zones of influence; there were fringe ends. Let us first look at the core. It really consisted only of Ricardo himself, James Mill, and McCulloch. But we add West and De Quincey. For reasons to be explained later, we do not add J.S.Mill. A fortiori, we do not add Fawcett or Cairnes. History of economic analysis 444 David Ricardo (1772–1823) entered upon a business career at the age of fourteen (he was first a broker, then a jobber and operator on the stock exchange, always a man of the money market) and made a considerable fortune. This is relevant for us because it means (1) that, though he came from a cultured home, he was all but uneducated in the scholastic sense; (2) that, since such a career is absorbing, only the dregs of his intellect and energy were available for analytic work until 1814 when he retired at forty-two. Nevertheless, he had done the bulk of his analytic work by then, as far as the workshop of his mind (not publication) is concerned. This is a striking proof of his splendid powers, but also the reason why his work, lacking as it did the benefit of full concentration during the third decade of life, which is of decisive importance in a thinker’s career, never penetrated down to the deepest depths, besides remaining badly finished in a formal and technical sense: we have before us the record of a wrestler who fought his matches with his right hand tied behind his back. After this, the reader will not suspect me of inadequate admiration for the man when he reads some of my comments upon the work. I shall go further. There is point in defending a figure of which we are justly proud against certain aspersions that are completely unfounded. Some writers have not been ashamed to suggest that his pecuniary interest—as a ‘bear’— determined the part he took in the controversies of his time on currency policy. I reply that Ricardo was able enough to make money on rising as well as on falling markets; and I repeat, in addition, that such writers do not seem to realize what it is they are really saying when resorting to such ‘explanations,’ since the only schemes of motivation that are open to their direct observation are their own. With less indecency, others have interpreted Ricardo as a representative of the ‘moneyed interest’ and as inspired by a ‘hatred’ of the landowning class. This, besides being irrelevant for the scientific contents of his writings, is of course sheer nonsense and only proves, if anything, the inability of these interpreters to understand a piece of analytic work. If I cared to waste space, I could prove this inability in each individual case. 1 Some day, perhaps, we may see completion of Professor Sraffa’s comprehensive edition of Ricardo’s works, which we have been eagerly awaiting these twenty years [the first five vols. had appeared by April 1952. Ed.]. Meanwhile, there is McCulloch’s edition of the Collected Works (1st ed., 1846) prefaced by a memoir of Ricardo. At the moment, since we reserve publications on money for the last chapter of this Part, 1 There is more excuse for the indictment that Ricardo was indifferent to the interests of labor. For though nothing can be farther from the truth, in his almost unbel carelessness of formulation he used, on two or three occasions, turns of phrase that seem to support this indictment. Ricardo was constantly complaining of being misunderstood (in this respect in a letter to J.B.Say) and not without justice. In part, however, he had only himself to blame. But, in this so-called Review of the troops 445 indifference, there was also an element of virtue: he was above the unctuous phrases that cost so little and yield such ample returns. we are concerned only with Ricardo’s Essay on the Influence of a Low Price of Corn on the Profits of Stock (1815) and his Principles of Political Economy and Taxation (1817; 3rd ed., the one to use, 1821; the reader will presumably resort to E.C.K.Gonner’s edition, 1882, last printing, 1929). Any thorough study should be supplemented by perusal of his letters to Say, Malthus, Hutches Trower, and McCulloch (for editions, see article on Ricardo by J.H.Hollander in the Encyclopaedia of the Social Sciences, which gives a brief but correct sketch and appraisal of Ricardo’s work) and by his Notes on Malthus’ Principles (ed. J.H.Hollander and T.E.Gregory, 1928; see review by E.S.Mason, ‘Ricardo’s Notes on Malthus,’ Quarterly Journal of Economics, August 1928). Of all general interpretations, the most important are: K.Marx in Theorien über den Mehrwert; J.H.Hollander, David Ricardo (1910); and K.Diehl, Sozialwissenschaftliche Erläuterungen zu David Ricardos Grundgesetzen (2nd ed., 1905). Still more instructive for our purposes are E.Cannan’s comments in his Theories of Production and Distribution (3rd ed., 1917). The literature on Ricardo is immense, especially if we count in, as we should, all the references to him in theoretical works such as Böhm- Bawerk’s or Taussig’s. I wish, however, to single out two relatively recent studies by excellent theorists that illustrate the extent of the range within which critics of the highest competence may differ as regards the nature and value of Ricardo’s performance: Professor F.H.Knight’s article on the ‘Ricardian Theory of Production and Distribution’ in the Canadian Journal of Economics and Political Science, vol. I (February 1935), and Dr. V.Edelberg’s article, ‘The Ricardian Theory of Profits’ in Economica, vol. XIII (1933). The discussion above goes some way toward explaining the character of Ricardo’s work. In utmost brevity, I shall add the following comments, if only to give the reader some points to reflect upon. Ricardo is usually described as a utilitarian, but he was not one. This is not because of his having had another philosophy but because that busy and positive mind had no philosophy at all. He was on good terms, mainly through James Mill, with the philosophical radicals. Presumably, he often expressed assent to utilitarian tenets. Historians are apt to exaggerate the importance of such things. But they do not mean much. Similarly, he had not an inadequate sociology, but none at all: there were certain economic problems that fascinated his powerful intellect but the socio-logical framework he took for granted—no matter of reproach this, but simply a matter of division of labor. Given its nature, his theory would not have been improved by being caparisoned sociologically; the critic who misses institutional disquisitions has simply called at the wrong address. But of course this applies only to his theory as theory, it does not apply to his History of economic analysis 446 recommendations. In these we do miss insight into the motive powers of the social process and, in addition, historical sense. 2 Two other points, however, bear directly upon Ricardo’s theory as theory. First, Marx’s contrary view notwithstanding, Ricardo’s was not the mind that, like Thünen’s, works from the clay. His method of work was essentially to take hold of the problems that the day presented to him, and to attack them by means of tools that he derived by criticism. The one is obvious at first sight from all his writings except the Principles (where it is only less obvious). The other is obvious from the Principles. Even if we did not know that Ricardo’s thought was inspired by the Wealth of Nations, which he took up in 1799 when boring himself at a health resort, we could not help seeing that the argument of the Principles starts with a criticism of A.Smith, which really runs through the whole book. With a high degree of confidence, we may reconstruct the development of his thought so far as it was not determined by his interest—analytic and practical—in current events: he studied the Wealth; he was shocked at what seemed to him to be a logical muddle; he set about straightening out this muddle; and the Principles was the ultimate result of this work of creative criticism. Let us make a note of this: Ricardo’s theoretical structure represents a particular way of recoining the Wealth; Malthus’ theoretical structure represents another way of doing this. As a corollary, I venture to state that Ricardo owed very little to any other writer, though his later study of Say and Malthus and his discussions with both and with James Mill no doubt served to clarify his ideas—of this more in a moment. Second, Ricardo’s was not the mind that is primarily interested in either fundamentals or wide generalizations. The comprehensive vision of the universal interdependence of all the elements of the economic system that haunted Thünen probably never cost Ricardo as much as an hour’s sleep. His interest was in the clear-cut result of direct, practical significance. In order to get this he cut that general system to pieces, bundled up as large parts of it as possible, and put them in cold storage— so that as many things as possible should be frozen and ‘given.’ He then piled one simplifying assumption upon another until, having really settled everything by these assumptions, he was left with only a few aggregative variables between which, given these assumptions, he set up simple one- way relations so that, in 2 I do not think that Ricardo ever did much historical reading. But this is not what I mean. The trouble with him is akin to the trouble I have, in this respect, with my American students, who have plenty of historical material pushed down their throats. But it is to no purpose. They lack the historical sense that no amount of factual study can give. This is why it is so much easier to make theorists of them than economists. Review of the troops 447 the end, the desired results emerged almost as tautologies. For example, a famous Ricardian theory is that profits ‘depend upon’ the price of wheat. And under his implicit assumptions and in the particular sense in which the terms of the proposition are to be understood, this is not only true, but undeniably, in fact trivially, so. Profits could not possibly depend upon anything else, since everything else is ‘given,’ that is, frozen. It is an excellent theory that can never be refuted and lacks nothing save sense. 3 The habit of applying results of this character to the solution of practical problems we shall call the Ricardian Vice. Presently, we shall try to size up the success of the school. Now we want to define the personal success of Ricardo and to see how he succeeded in forming that school. The first step is easy: no doubt it is possible that, with the public as well as with his fellow economists, his reputation was made by his writings on the great economic issues of his time—in the first instance, by his writings on monetary policy, in the second instance, by his writings on free trade. In all the questions he touched, he was on the side that would have won out anyhow, but to the victory of which he contributed usable argument, earning corresponding applause. Though others did the same, his advocacy was more brilliant, more arresting, than was theirs: there is no superfluous sentence in his pages; no qualification, however necessary, weakens his argument; and there is just enough genuine analysis about it to convince practically and, at the same time, to satisfy high intellectual standards but not enough to deter. His polemical talent, which combined to an altogether unusual degree readiness, force, and genuine politeness, did the rest. People took to his theory because they agreed with his recommendations. He became the center of a circle that looked to him for guidance and in turn defended his opinions. It is neither his advocacy of winning policies per se, nor his theory per se, that, to this day, makes of him, in the eyes of some, the first economist of all times, but a felicitous combination of both. 4 But what about his contribution to scientific economics? By far the most important one was, I think, the priceless gift of leadership. He refreshed and irritated. In either case, he shook up. The fruits of his reasoning intrigued all the people who did not see the mechanics I have tried to characterize above. His teaching, in its middle and higher layers, established itself as the new thing, compared with which everything else was inferior, obsolete, stale. Very 3 Speaking of Lord Keynes’s theory, Professor Leontief has called this procedure Implicit Reasoning. The similarity between the aims and methods of those two eminent men, Keynes and Ricardo, is indeed striking, though it will not impress those who look primarily for the advice a writer tenders. Of course, there is a world between Keynes and Ricardo in this respect, and Keynes’s views on economic policy bear much more resemblance to Malthus’. But I am speaking of Ricardo’s and Keynes’s methods of securing the clear-cut result. On this point they were brothers in the spirit. 4 The reader is invited to observe this additional affinity between him and Lord Keynes. Every word in the paragraph above might be written with reference to the latter. History of economic analysis 448 quickly his circle developed the attitude—so amusing but also, alas!, so melancholy to behold—of children who have been presented with a new toy. They thought the world of it. To them it was of incalculable value that only he could fail to appreciate who was too stupid to rise to Ricardian heights. And all this meant controversy, impulse, new zest, new life, and these constitute valuable contributions in themselves. 5 But there was something else. Economic theory is not a stock of political recipes but, to use Mrs. Joan Robinson’s felicitous phrase, a box of analytic tools. And these tools are not a heap of disconnected elements but form an engine. This engine grinds out results, within wide limits, no matter what the concrete problem is that is fed into it. It works the same way, formally, whether the problem is the effect of a tax or of a wage policy, or of a piece of regulation, or of protection and what not. Hence the engine, within those limits, may be constructed once for all to stand ready for use whenever needed for an indefinite variety of purposes. This has always been felt instinctively. Cantillon and the physiocrats brought the idea out into the open. But nobody before Ricardo grasped it as vigorously as he did. In the first two chapters of the Principles, he undertook to build such a general-purpose engine. This spelled decisive advance. But, of course, if a defective engine meets with success, that advance may easily prove to be a detour. And let me state at once: a detour Ricardian analysis was. Construction of such an engine of analysis entailed the consequence that the individual elements that make up general economics were welded together into a systematic unit as they never had been before. However unsystematic Ricardo’s Principles is in form, it is a systematic performance of the first order in substance. Among those elements themselves there is none for which priority of publication could be ascribed to Ricardo with certainty. Above I have expressed myself to the effect that Ricardo, though he owed much to A.Smith, owed very little to other authors. 6 I believe, in fact, that his subjective originality was of a high order. Moreover he was frank and generous in acknowledgments: though I have criticized A.Smith and shall criticize A.Marshall for inadequate acknowledgment, I do not think that any such criticism should be made with reference to Ricardo. 7 But objectively, all the ideas of the Principles are individually met with before, and we cannot attribute more than effective synthesis to Ricardo, unless (1) we decide to say that, after having gone out with A.Smith to hunt beaver and deer, Ricardo did twist Smith’s suggestion into a labor theory of value that was his own, and (2) we decide to disallow Torrens’ claim, mentioned in footnote 7. 5 See preceding footnote. 6 Barton may be an exception (see below, ch. 6, sec. 6h). Ricardo’s preface mentions Turgot, Steuart, Smith, Say, Sismondi ‘and others’ (besides Malthus and West’s essay, see next footnote). But only Smith’s influence is of first importance. Say influenced Ricardian teaching only in one point (Law of Markets). I find no trace of any influence of Turgot, Steuart, or Sismondi. 7 Claims were raised against him, however, especially in three instances. West complained with some bitterness that Ricardo failed to recognize his priority as regards the theory of the falling rate of profits. Ricardo said in the original preface to the Principles that ‘in 1815, Mr. Malthus…and a Fellow of University College, Oxford [West] presented to the world…the true doctrine of rent…’ It is true that he failed to make a similar acknowledgment about profits. But it may be replied that this matter is covered by the acknowledgment of West’s priority as to the theory of rent. Torrens was Review of the troops 449 inclined, though mildly, to vindicate a title to priority as regards the theorem of comparative costs. He may have been right. But even if he was, there is a difference A Reader’s Guide is easy to give but, owing to Ricardo’s lack of system (in the formal sense), much less easy to follow. The analytic engine is displayed in the first two chapters of the Principles. Every line is important, and sections 4 and 5 of the first chapter are as difficult to absorb as is anything the reader may run up against in economic literature. Chapter 31, ‘On Machinery’ added in the third edition, to which alone this guide refers, complements those fundamentals in one important point. All the rest is really only development (chs. 3–6), application (chs. 8–18 and 29, all on taxation), defense and criticism (chs. 20, 21, 24, 26, 30, 32), but, unfortunately, contains so many obiter dicta on fundamentals as to make it very hazardous to skip. For example, Chapter 27, ‘On Currency and Banks,’ which together with Chapter 28 deals with matters that the student of Ricardo’s general theory might feel inclined to neglect, contains passag es that shed much-needed light on Ricardo’s handling of the theorem that marginal cost equals price, and on the sense in which he was in full possession of it. Foreign trade is dealt with in the famous Chapter 7, which is also really a supplement to the fundamental ones (and is itself supplemented by chs. 22, 23, and 25). Chapter 19 (and, in a sense, also 21) pledged Ricardo’s allegiance to Say’s law. So brilliant a light will attract moths—there are a certain number of obscure Ricardian writers. Moreover many people, noneconomists included, will profess themselves votaries of the light even though they have but a dim perception of it—just as today there are many Keynesians and Marxians who have never read a line of Keynes or Marx. In addition, some of the independents, even a few dissenters such as Torrens, will still profess decent respect for the eminent fellow economist from whom they dissent, and be quite ready to use phrases and propositions of his wherever they feel they can. Finally, economists of later generations—conspicuous instances were J.S.Mill and A.Marshall— may pay homage to a great name of the past in such a way as to hide from themselves and others the full extent of the gulf that separates them from him. All this is apt to mislead the retrospective glance and to make the influence of Ricardo and his school look greater than it actually was. In the interest of a true picture of the history of economic analysis, it is necessary to reduce this influence to its proper proportions. 8 We have already seen that the core of the school consisted of only four men besides Ricardo himself. By this I mean that James Mill, McCulloch, and De Quincey were the only unconditional adherents and militant supporters of Ricardo’s teaching who gained between an author’s behavior in such matters in a hasty sketch such as the Principles—no contradiction to the statement about the systematic nature of Ricardo’s performance!—and an author’s behavior in such matters in fully matured works that had been elaborated with infinite care such as A.Smith’s Wealth and A.Marshall’s Principles. The third claimant was J.Rooke, Claim to the Original Publication of certain new Principles…(1825), unearthed by Professor Seligman. So far as I can see, he has no case at all. 8 It cannot be repeated too often that for any purpose other than that of a history of analysis there would be no need for any such operation, and that the influence we mean to appraise is influence upon scientific economics only. History of economic analysis 450 sufficient reputation for their names to survive. West 9 —partly because he went to India—stood apart. He was, and felt himself to be, no member of any school but the peer of Ricardo and the independent discoverer of the essentials of Ricardian doctrine. His evident resentment against Ricardo was probably unjustified. But his regret at being ousted from what he conceived to be his place, by the latter’s superior force and brilliance, was not. For the Essay contains in fact not only a formulation of the ‘Ricardian’ theory of rent but also the application of the law of diminishing returns to a theory of profit, hence the pivot of the Ricardian system. Therefore, though we have no choice but to include him in the ‘Ricardian’ school, we shall temper this injustice by speaking occasionally of West-Ricardian doctrines. James Mill must certainly be recognized as a man of light and leading, irrespective of what we may think of the value of the light he shed and of the leads he gave. 10 McCulloch 11 has been so roughly handled by Marx and others, Böhm-Bawerk among them, that it seems right to emphasize his merits rather than the fact that his ability, though of a most useful kind, was not of a high order. His factual work, an important achievement, will be mentioned later. His zest for social reform—into which entered an element that spells some analytic merit: he was a leading exponent of the ‘wage-fund theory’ but realized that this theory does not prove the futility of trade-union wage policy—should recommend him to modern critics. Moreover, he rose to be one of the best-known figures of the profession in his day, and succeeded in keeping the 9 Sir Edward West (1782–1828), one of the foremost scientific economists of the age, has never received his due. His Essay on the Application of Capital to Land…(1815, reprinted in Professor Hollander’s series of economic tracts, 1903) is much more than a mere statement of the law of diminishing returns, which is how it is usually described in the history of economics. His second book, Price of Corn and Wages of Labour… (1826), is marked by the same independence of thought. 10 We have met James Mill (1773–1836) twice already, both times in strategic positions: as the author of the Analysis of the Phenomena of the Human Mind (1829) and as the exponent of the official Benthamite doctrine on government. We have to add his monumental, and indeed path- breaking, History of British India (1817), which posthumously grew into ten volumes and was the cornerstone of his reputation with the general public, and his two economics books (a third, the earliest one, I do not know), viz. Commerce Defended (1808) and Elements of Political Economy (1821; 3rd ed., the one to be used, 1826). The author in the preface described the latter as a ‘schoolbook’ and as devoid of originality (not quite true, though the original points were not all improvements. As has been recognized, e.g. by Marx, the book represents an effort that was by no means contemptible). The standard biography by A.Bain (1882) fails to do justice to the economics of James Mill and also to solve the enigma of the man—that intellectual machine that did not know how not to work. 11 John Ramsay McCulloch (1789–1864) was a journalist, academic teacher, and civil servant and, though the most unphilosophical of men, may be counted in with the philosophical radicals. Neglecting for the moment his factual work, I shall mention only his Principles of Political Economy (1825; 5th ed., 1864); his Literature of Political Economy (1845), a fairly comprehensive annotated catalogue and immensely useful as such (the comments on each author, written from the standpoint of a naïve and unquestioning faith in Ricardian doctrine, are a revelation for anyone who wishes to grasp the spirit of the Ricardian school); and the Essay on the Circumstances which Determine the Rate of Wages (1826), his most ambitious effort in economic theory. Both his letters to Ricardo and Ricardo’s letters to him have been published, in 1931 Review of the troops 451 . interest of a true picture of the history of economic analysis, it is necessary to reduce this influence to its proper proportions. 8 We have already seen that the core of the school consisted of. a history of analysis there would be no need for any such operation, and that the influence we mean to appraise is influence upon scientific economics only. History of economic analysis 450. fact not only a formulation of the ‘Ricardian’ theory of rent but also the application of the law of diminishing returns to a theory of profit, hence the pivot of the Ricardian system. Therefore,